I have received a tremendous amount of feedback from public sector fleet managers to the Market Trends column appearing in the August 2002 issue on the need to create a partnership with fleet service providers. You will be able to read many of these comments in the letters to the editor page over the next several issues.
Traditionally, public fleet operations have tended to be undercapitalized and understaffed. As a consequence, public fleet managers stress that they are already outsourcing or subletting, some as much as a third of their fleet work.
In addition, declining tax revenues are prompting additional pressures to consider outsourcing as many government fleet managers report that their budgets are being reduced. They are looking for alternate ways to maintain the same level or improved levels of service within the confines of a flat or reduced budget.
A number of public fleet and equipment managers report that they have been challenged by their upper administration to consider outsourcing as a way to reduce costs. In addition to declining tax revenues, other factors are increasing the level of subletting. For instance, more vehicle maintenance work is being outsourced as a result of:
The increased complexity of today’s vehicles
The shortage of qualified technicians
The stringent environmental requirements to operate a full-service maintenance facility
Some fleet managers who have elected to sublet this work say that it allows them to concentrate on their core goals, such as providing superior customer service, improved vehicle utilization, vehicle procurement, and maintaining compliance with various federal environmental regulations.
These are the same fleet managers who are confident about the performance of their fleet operation and see themselves more than capable of competing with private sector companies on a competitive bid basis.
As one public fleet manager said, his philosophy is to do in-house what he does most economically to keep his internal customers satisfied and outsource those services that can be better accomplished by specialists.
Also, affirmative action requirements influence the procurement process for public sector fleets. Many government agencies are required to offer Small & Minority Vendor programs, which favors outsourcing.
Stumbling Blocks to Doing Business
In the past, several fleet management companies made strategic decisions to pursue government fleets, creating entire departments to achieve this objective, only to see these efforts fail and now view any further use of resources, strategic focus, or dollars to be a questionable investment.
However, as one consultant indicated, there may never be a better time than now for fleet service providers to market their services to the public sector. He argues that some government agencies are complacent when their coffers are full and not very receptive to outsourcing proposals. However, with government budgets contracting due to declining tax revenues, public fleets are looking anew at propositions to sublet certain work.
Despite this, there still exist a number of stumbling blocks for fleet service providers. From the public fleet manager perspective, there is a perceived loss of control and accountability for services that are no longer managed in-house. Many public sector fleets are also maintained by a union force, which lobbies vigorously, and usually successfully, against privatization attempts.
Some public fleet managers rightly observe that many fleet service providers often regard them as clients of last resort. They point out that the proportion of solicitations received from fleet service providers tend to increase when economic times are bad and decrease when the economy improves.
Another stumbling block is the needless antagonism that is created when private sector companies attempt to bypass the fleet manager in soliciting work to be sublet to them. Universally, public sector fleet managers say that a service provider would be more successful by establishing a relationship with the fleet manager and showing how they can help them.
Looking to the Future
Despite these stumbling blocks (and the others discussed in the August issue), many public sector fleet managers say that they represent a receptive market for the fleet services offered by private sector companies. In the long run, a partnership between public fleets and fleet service providers can be a win-win situation for everyone.
